Well this didn’t take long
Two months into the new RESPA rules and it is becoming clear to us at closingcostfax.com that the new Good Faith Estimate is being exploited by some originators. Closingcostfax.com has identified several areas that are becoming the stomping grounds of predatory lenders. First and most obvious is the Our Origination Charge on page 2 section one of the GFE. With no itemization on the GFE, unscrupulous originators are already beefing up their fees in this section. We have seen $5,000 to $6,000 charges, with box 1 clicked in section 2. That means this charge is all fees right into the lenders pocket. Borrowers must insist on a breakdown of this charge to have any fair chance of negotiating these fees. If any of these fees come in lower at closing all the lenders has to do is increase another fee and keep the adjusted origination charge the same, pocketing the difference as pure profit and the borrower would never know the other fees came in lower. The best way for borrowers to take advantage of the new GFE is to look at closingcostfax.com comparison page and compare the rate, and fees 1 through 6 side by side of various lenders. Pick the lowest rate with the lowest Adjusted Origination Charge (A). Then shop for your other services in section 4, 5 and 6. Using Closingcostfax.com method will allow you to control the most expensive transaction of your life.
Wednesday, March 3, 2010
Tuesday, January 26, 2010
New Good Faith Estimate
Well we are 3 weeks into the new Good Faith Estimate(GFE) forms and already we are seeing the new RESPA laws being abused. Originators are using fee sheets and loan analysis when they should be using the new Good Faith Estimate. These fee sheets are not binding and give the borrowers a false sense of security when it comes to the real GFE. The time spent on these fees sheets could be used developing a solid GFE for the borrowers. My advise to any borrower is to ask specifically for the new GFE and if the originator will not provide it go somewhere else for your loan.
Tuesday, August 11, 2009
Closingcostafax.com/Mortgage Bail out Plan (Subprime Renter)
This is my idea from September of 2008 for solving the housing crisis
For any Mortgage backed asset that the U.S Government must purchase as part of the bail out bill the following rules will apply.
The loan file must contain a full appraisal by a licensed appraiser on the subject property dated no earlier than 6 months from purchase of said bad asset(All appraiser must be pre-approved by HUD)
The appraisal on the property will include a detailed market rent analysis provided by HUD
After purchase of said bad assets is completed HUD will inform the borrowers, of the following options.
A. If they are in an adjustable rate they can choose to modify their loan by converting it to a 30yr. fixed rate. The rate will be determined by taking the market rent for the subject property and adding 10% to the payment (Example: 3 bedroom home in Canton, Ma. Average rent $1,483 a $275,000 loan would be modified to a rate of 6% on a 30yr. fixed and a new payment of $1,648 principal and interest)
B. If the borrower is in default and cannot afford to make the payments on the current mortgage and cannot afford the new payments on a modified loan. Borrower has the option of selling the property to the government for $1.00 and renting the house back at 10% below the market rent for 5 yrs. (Example: 3 bedroom home Canton,Ma.Average rent $1,483 minus 10% borrower could stay in home for $1,334 per month plus taxes) Insurance will be paid by the original seller of the bad asset. At the end of the 5 yr period HUD will put the property up for sale. Borrower will have first right of refusal and a 20% discount on the sale price.(If all payments have been received on time) The entire rent will be tax deductible
C. If borrower cannot afford option A or B they will have 6 months to secure another property owned by the government that they can afford (Example: Borrower A cannot afford the $1,483 payment on his or her current home they turn it over to the Government to rent or sell to someone else and rent another home from HUD that they can afford.
By allowing the borrowers to stay in the properties under anyone of these options the Government will accomplish the following.
1. It will greatly help stabilize property values by decreasing the number of discounted bank owned properties on the market that hurt all home owners’ values.
2. Millions of families would be able to stay in there homes with the hope of purchasing them back in the future.
3. HUD would be able to keep up a cash flow to of set the 700 Billion dollar bail out
4. Would discourage borrowers from walking away from their loans to go rent across the street for less.
5. Neighborhoods would not have vacant houses that add to blight and crime.
6. After 5 yrs the Government should relies some equity increase in property values
7. Borrowers would be more likely to up keep the properties.
This is my idea from September of 2008 for solving the housing crisis
For any Mortgage backed asset that the U.S Government must purchase as part of the bail out bill the following rules will apply.
The loan file must contain a full appraisal by a licensed appraiser on the subject property dated no earlier than 6 months from purchase of said bad asset(All appraiser must be pre-approved by HUD)
The appraisal on the property will include a detailed market rent analysis provided by HUD
After purchase of said bad assets is completed HUD will inform the borrowers, of the following options.
A. If they are in an adjustable rate they can choose to modify their loan by converting it to a 30yr. fixed rate. The rate will be determined by taking the market rent for the subject property and adding 10% to the payment (Example: 3 bedroom home in Canton, Ma. Average rent $1,483 a $275,000 loan would be modified to a rate of 6% on a 30yr. fixed and a new payment of $1,648 principal and interest)
B. If the borrower is in default and cannot afford to make the payments on the current mortgage and cannot afford the new payments on a modified loan. Borrower has the option of selling the property to the government for $1.00 and renting the house back at 10% below the market rent for 5 yrs. (Example: 3 bedroom home Canton,Ma.Average rent $1,483 minus 10% borrower could stay in home for $1,334 per month plus taxes) Insurance will be paid by the original seller of the bad asset. At the end of the 5 yr period HUD will put the property up for sale. Borrower will have first right of refusal and a 20% discount on the sale price.(If all payments have been received on time) The entire rent will be tax deductible
C. If borrower cannot afford option A or B they will have 6 months to secure another property owned by the government that they can afford (Example: Borrower A cannot afford the $1,483 payment on his or her current home they turn it over to the Government to rent or sell to someone else and rent another home from HUD that they can afford.
By allowing the borrowers to stay in the properties under anyone of these options the Government will accomplish the following.
1. It will greatly help stabilize property values by decreasing the number of discounted bank owned properties on the market that hurt all home owners’ values.
2. Millions of families would be able to stay in there homes with the hope of purchasing them back in the future.
3. HUD would be able to keep up a cash flow to of set the 700 Billion dollar bail out
4. Would discourage borrowers from walking away from their loans to go rent across the street for less.
5. Neighborhoods would not have vacant houses that add to blight and crime.
6. After 5 yrs the Government should relies some equity increase in property values
7. Borrowers would be more likely to up keep the properties.
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